A food delivery messenger carries a bag of food outside Sweetgreen in Manhattan on September 14, 2023.
Jenna Moon | The Washington Post | Getty Images
A group of popular weight-loss and diabetes drugs reduces some consumers' appetites – as well as how much they spend on food.
Most people who take these drugs, called GLP-1s, say they spend less on eating out at restaurants and ordering takeout, according to a Morgan Stanley survey conducted Tuesday. A smaller percentage of those surveyed say they tighten their wallets at the grocery store.
These findings add to growing concerns that increased demand for GLP-1s could impact some of the largest restaurant companies and makers of packaged snacks such as Doritos, Oreos and Hershey's Kisses. Includes GLP-1s Novo NordiskThe popular weight loss injection Wegovy and its diabetes counterpart Ozempic, along with Eli LillyThe popular weight loss remedy Zepbound and diabetes injection Mounjaro.
The growing demand for these four medicines is not expected to subside anytime soon. In the new survey, Morgan Stanley analysts said they expect the market for GLP-1s to be worth $105 billion by 2030. They also estimate that 31.5 million people, or about 9% of the US population, will take GLP-1s by 2035.
“There is growing evidence that pharmaceuticals are having a measurable impact on consumer behavior and spending at groceries and restaurants,” Morgan Stanley analysts said in the survey. “All of these dynamics suggest that the impact of GLP-1 drugs across consumer segments is set to increase as drug uptake and drug reshaping of behavior grow among a demographic that represents a disproportionate share of calorie consumption.”
But many food and beverage companies have reassured investors over the past few months that it is still unclear how much these drugs will impact their revenues. Morgan Stanley also said in the survey that GLP-1s represent manageable long-term pressure on restaurants, not an “existential risk.”
“Restaurants provide convenience and/or experience in addition to food, and this will not change with the use of GLP-1,” the analysts said. But they noted that some restaurants may have to adapt to health-conscious consumer behaviors.
Fast casual restaurants and coffee shops are better positioned to manage increased consumer use of GLP-1s, including… reward, Chipotle, Sweet green And StarbucksAccording to Morgan Stanley. Local service restaurants and “more lenient” fast food restaurants may face more pressure, including… Jack in the box, Wendy, The wing stopped, Shake Shack And Portelos.
Meanwhile, Morgan Stanley sees… Hershey As the most at risk among packaged food companies due to its consumer-focused US snack portfolio. Companies that offer healthy foods should take advantage of GLP-1, including: Biodynamic farms, Bellring brands, Simply good foodsThe company said.
Among beverage companies, those that produce alcoholic beverages are most at risk. Include those Molson Coors, Boston beer, Constellation brands And DiageoAccording to Morgan Stanley.
Wegovy boxes made by Novo Nordisk at a pharmacy in London, Britain, March 8, 2024.
Holly Adams | Reuters
Morgan Stanley conducted a survey of 300 consumers currently taking GLP-1 medications in February. According to the company, these people are “at the beginning of their weight loss journey,” but are making fundamental changes to their diet and spending.
When asked to measure how their monthly spending on dining out at restaurants has changed since the start of GLP-1, 63% of consumers said they are spending less, 28% said they are spending about the same amount, and 9% said they are spending more. Meanwhile, 61% said they spend less on deliveries or takeout from restaurants, 31% said they spend about the same amount, and 8% said they spend more.
Fewer participants said they had reduced their grocery spending since starting GLP-1: 31% said they were spending less, 46% said they were spending about the same amount, and 23% said they were spending more.
The survey also found that people tend to stay at the same restaurant but change the types of meals they order.
When asked if they finish less food than they order in one sitting when eating out, 42% of participants said “always” or “most of the time,” and 44% said “sometimes.” 41% said they “always” or “most of the time” order smaller portions of food in general, while 43% said they only sometimes do so.
Consumers in the survey reported lower food consumption across the board, but the difference was most noticeable in snacks, sweets, soft and sugary drinks and alcohol, according to the Morgan Stanley survey. Nearly half of people reported cutting consumption of regular soft drinks, alcohol, and salty snacks by 50% or more since starting weight-loss medications. Twenty-two percent reported stopping alcohol consumption completely.
Based on these results, Morgan Stanley expects consumption of ice cream, cakes, cookies, candy, chocolate, frozen pizza, potato chips and regular soft drinks to decline 4% to 5% by 2035. The company also expects a roughly 3% decline in consumption. From alcohol, frozen popcorn or pastries, cookies, cereals, cheese, chewing gum or mints, energy drinks, etc.
Packaged fruit juices, soups, sports drinks, coffee, frozen diet meals, tea, granola and energy bars are among the foods that will see the smallest decline in consumption, the company said.
Notably, the survey also found that 40% of participants reported smoking traditional cigarettes at least weekly before starting GLP-1, but this number dropped to 24% after treatment. Likewise, weekly e-cigarette use decreased from 30% to 16% of respondents.
However, Morgan Stanley said it was cautious about drawing conclusions from the survey about the effect of GLP-1s on addictive behaviors such as smoking. The company said that it is monitoring ongoing medical research in this field.
